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Update on the Disaster at Penhorwood

2011 Summary:

The disaster at the Penhorwood Condominium Complex in Fort McMurray is another graphic illustration of huge potential problems in a condominium purchase. In March of 2011, on a cold winter evening just before midnight, all residents were ordered to evacuate on 30 minutes notice. The Condominium Board had requested the evacuation order after receiving an engineer’s report fearful of a disastrous foundation collapse.

Fingers were being pointed everywhere. The Condominium Corporation blamed the builders and the developers, the Regional Municipality of Wood Buffalo, project engineers, safety codes officers, and the architect. There had already been a lawsuit in 2007 that the Condo Corp had launched against the developer, which was based on a previous engineer’s report noting numerous deficiencies. There had also been a $25,000 per unit special assessment related to earlier problems. Statements of Defense denied all allegations and nothing had been proved in court.

However, since the condominium owners have been fighting the demolition order for a couple of years and have said they cannot afford the costs of demolishing, the regional municipality says they will now do it. Christine Burton is president of the Penhorwood Condo Association and she says that the regional municipality will file a caveat against each unit title. They intend to recoup the cost of demolition when the land is sold. Demolition cost is approximately $100,000 per unit.

Remember that every owner will now lose all the cash that they put into each unit purchase, be responsible for their mortgage, and owe a further $100,000 demolition cost for each unit they own. I don’t know the original purchase price of all the units, but I expect minimum losses for each unit owner will be in the $250,000 range.

On their part, condominium owners continue with their $60 million lawsuit launched against 28 defendants including the municipality, developers, and construction companies. This is the worst condominium disaster I have ever come across!!!

Where does this leave you as an investor looking to buy a condominium unit?